Government CIOs look beyond procurement panels

What they look for before signing big deals.

Despite formidable power and ability to make or break an IT vendor, the chief information officers of Federal and State Government agencies just want good vendor relationships, a panel has heard.

Outgoing Human Services CIO John Wadeson and ASIC CIO Rachel Johnson-Kelly joined former British Government CIO John Suffolk and vendor TechnologyOne to discuss a range of otherwise unspoken issues infrequently aired in the nation's capital.

Although whole-of-government procurement panels took up a large section of the discussion, it emerged that CIOs were looking beyond the arrangements and seeking stronger ties with vendor partners than just engaging them at the lowest cost.

Large agencies benefit from panels

Wadeson said that the Department of Human Services did not need a procurement panel to achieve IT savings but was still in support of the arrangement.

Economies of scale from panels were marginal as Human Services’ size already gave it substantial negotiating power.

But "when you are about a third or a quarter of the public service, if we don’t use the panels, the panels will not be used by anyone,” he said.

The main reason Human Services used panel arrangements was to reduce delays that could be introduced when attempting to sign a contract with a vendor.

“We have found these processes to be overall in our organisation’s interest. I know that is not a view shared around Canberra by everybody,” Wadeson said.

CIOs hate procurement delays as much as vendors

CIOs on the panel felt the pain of delays as much as vendors.

Wadeson said one of the "realities of purchasing IT" in government agencies was that "by the time you get to the end [of the process], you don't want it any more".

Former British Government CIO John Suffolk said that despite procurement reforms in Europe, the average time to seal a deal on a large prohect was still 76 weeks.

Only vendors with deep pockets could continue to deal with the Government there, effectively ruling out small-to-medium players.

"Show me anywhere in the world that has effectively dealt with procurement,” he said.

“We are all saying the same thing: at government-level it is a complete nightmare to get the balance right.

“I reckon we’ll be sitting here in ten years time, still talking about what is the best way to procure. I have not yet seen a model that I think is effective."

Two tribes with different values

Software Queensland chair and general manager of PLUS professional services at TechnologyOne, said that government customers and vendors were "two different tribes with two different values".

The challenge, he said, was to have a 'translator' that could assist in help each understand their different stances.

“On the one hand you have the private sector which marries risk with reward. On the other side the public sector is largely risk-averse. So we get misunderstandings. [But] the two can complement one another,” Vickers said.

Vickers said that while government panels had a place for non-controversial standard IT acquisitions, "when you get to the larger complex deals you need that element of a relationship" that did not come from processes that were focused solely on cost.

"This is where it starts breaking down. What happens is that your procurement team does not talk to the user. And the user never gets a chance to talk to the person that actually is going to be delivering this project,” he said.

Vendor relationships matter

ASIC chief information officer Rachel Johnson-Kelly said the key to making panel arrangements work was to use them to get a short list of suppliers that understood the nature of her organisation and its technological roadmap.

She said that ASIC had established a panel of 18 IT services suppliers of various sizes and skills that it could draw upon for projects.

“It’s about skills and relationships,” Johnson-Kelly said.

“I hold the very firm view to write the contract so the lawyers want to be involved – but the day you put it in the bottom drawer, it’s over.

"You need to have a relationship with that vendor and that relationship needs to be multi-tiered. It has to be at the technical, manager, and the business level.

"And unless you have constant governance around those tiers, you won’t get value out of [the relationship].”

A common theme among the three CIOs on the panel was the importance of vendor relationships in the long term.

However, Vickers expressed some skepticism.

"If you are government, don't be my partner. Just pay me on time. Let's have a good working relationship but I don't want to be your friend, thank you,” he said.

Suffolk countered that Vickers' attitude could be a recipe for project failure, especially if there were several suppliers that adopted the approach.

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